Becoming rich by designing for the poor
Emerging markets have realities that can be addressed by using existing technologies in innovative ways
In the old days — as recently as the dying years of the last century — technology was trying to keep up with our needs. But instead of playing catch up, its pace overtook our needs. In the end, technology, especially those products that were powered by the silicon chip, won the race. Today we have more technology than we need and yet, rather than using what already exists to solve societal problems, we still go after creating more and more technology for the narrowest part of the pyramid — the top.
I suspect this has more to do with where the dollars come from than the fact that a lot of existing technology can easily be reconfigured for the underserved sections of society. The clichéd BoP social impact solutions we hear of are likely to be outmoded even before they make it to the drawing board. But that won’t keep the incumbent interests from flogging the proverbial dead horse. We have become masters of leveraging information asymmetry even in the Internet era and will continue to exploit the ignorance of customer with impunity.
This is especially significant when the consumer segment happens to actually be ignorant of the state of technology and what it can do to make their lives easier.
How do you go about addressing Bottom of Pyramid (BoP)?
It makes sense to go bottom up; create a portfolio of products and services to fulfill basic needs before going after the goodies.
My list of ‘basic’ has
- Healthcare, Education, Finance at a category level;
- those areas that create better living conditions such as sanitation, clean water, food, energy at the next; and
- communication as a means to keep abreast with the world as well as a channel for feedback, fun and information exchange.
I’m not saying bottom of the pyramid is either easy or that it will be any cheaper. Quite the opposite. There’s no intelligence required if all we have to do is to strip the product down to its essentials to reduce quality.
I’m also not a big advocate for inventing niche products to go into these markets. These products must be simple, intuitive, safe and sexy — aka world-class. I don’t see why not. Prof. Anil Gupta famously says, “the minds at the margins are not marginal minds.”
The questions we need to ask ourselves are:
Ought we pamper the bottom half of the pyramid while clandestinely reaching into their pockets giving them products that they don’t really need?
Where will the energy to power these products come from?
Is there an equivalent Maslow’s hierarchy that maps needs to products and services?
How does one make a low-cost product — is it about ground-up re-design with a cost focus, or about using low-cost components?
The most important part is context.
Context is about culture, geography, climate, behavior, resources, energy within the boundaries of environmental friendliness and ecology.
Everything else is secondary — design, materials, processes, technology and finally economic considerations. I have on purpose kept economics at the bottom of the list.
Call it ‘inversion thinking’.
Economics drives everything in today’s world, whereas it is merely a function of supply and demand. In my view, the concept of low-cost itself is deeply flawed. What we should really concern ourselves with is lower price and, however counterintuitive it may seem, lower price is not simply lower cost. I’m no economist but my business sense tells me that I can drive the price down by increasing volumes and reducing profits. Besides, adopting newer business models such as crowdsourcing, collaborative manufacturing and other such innovation, points to ways of addressing this key issue.
Low-cost is different from cost-effective is different from value added. Unless the envisaged product enhances value, low-cost has no meaning.
The effects of technology ubiquity are visible in the westernized lifestyle of our cities. They have provided the velocity of capital needed to fulfill the rising aspirations of the middle class. It is very easy to fall prey to conventional wisdom of ‘exporting’ this to smaller towns and villages. We need not only to shape markets but also reshape the patterns of consumption to conform to sustainability guidelines and eco-friendly practices.
Earlier this year, Amit Gulati, who runs Incubis Consultants, invited me to participate in an interactive session to think through design ideas for a low-cost washing machine. The workshop brought out some very interesting and fascinating ‘ways of seeing’ that completely overturned the engineering / tech / product way of approaching design problems.
Did we need to redesign the washing machine (Product) under stricter constraints [this is the way most people think — start with an existing product, strip it of features, use cheaper materials and processes, reduce quality and make it low-cost], or did we need to go up a level and reframe the problem itself.
Markets have shifted from the West;
India is predicted to become the 5th largest market in the world by 2025.
Rural India’s income is expected to grow at 3.6% per year from now till 2025 — people’s aspirations will grow. More disposable money will make them the largest potential consumers of goods and services.
But the question really is whether the consumerist model of the rest of the world is the right fit. Look at what it has done to the US. While on the one hand it seems clear that India will be one of the largest markets in the world, on the other there’s the question of what to make available to this burgeoning segment and how much.
Also at what cost to the larger social and ecological environment.
My key takeaway here is that we need to recast the needs of this segment into their context first, and address other considerations subsequently, if at all. Least of all cost.
